Authors retain the copyright without restrictions for their published content in this journal. HSSR is a SHERPA ROMEO Green Journal.
Publishing License
This is an open-access article distributed under the terms of
DEVELOPING AND VALIDATING THE MEASUREMENT MODEL FOR FINANCIAL LITERACY CONSTRUCT USING CONFIRMATORY FACTOR ANALYSIS
Corresponding Author(s) : Zainudin Awang
Humanities & Social Sciences Reviews,
Vol. 8 No. 2 (2020): March
Abstract
Purpose of the study: This study aims to develop and validate the instruments measuring financial Literacy construct.
Methodology: The pilot study randomly sampled some 100 school-teachers using a self-administered questionnaire. The Exploratory Factor Analysis (EFA) procedure has explored the usefulness of measuring items and determined the dimensionality of the construct. Finally, using the newly developed instruments, the field study obtained a random sample of 300 school-teachers to survey using a self-administered questionnaire. The data from the field were used to validate the instruments through the Confirmatory Factor Analysis (CFA) procedure.
Main Findings: The EFA procedure found three components that emerged from the items. The CFA procedure validated the instruments measuring Financial Literacy construct for uni-dimensionality, validity, and reliability.
Applications of this study: The result showed that the measurement model of the Financial Literacy construct achieved the requirement for construct validity and reliability and should be able to be used in the future of research.
Novelty/Originality of this study: This study produced instruments to assess Financial Literacy performance specifically among school teachers in Malaysia. School teachers consist of the highest number of employees in the country besides their nature of works and job characteristics differ from another group of employees.
Keywords
Download Citation
Endnote/Zotero/Mendeley (RIS)BibTeX
- Abreu, M., & Mendes, V. (2010). Financial literacy and portfolio diversification. Quantitative Finance, 10(5), 515-528. https://doi.org/10.1080/14697680902878105 DOI: https://doi.org/10.1080/14697680902878105
- Aimran, A. N., Ahmad, S., Afthanorhan, A., & Awang, Z. (2017). The development of comparative bias index. In AIP Conference Proceedings, 1870. AIP Publishing. https://doi.org/10.1063/1.4995935 DOI: https://doi.org/10.1063/1.4995935
- Aimran, A. N., Ahmad, S., Afthanorhan, A., & Awang, Z. (2017a). The assessment of the performance of covariance-based structural equation modeling and partial least square path modeling. In AIP Conference Proceedings (1842), No. 1, p. 030001). AIP Publishing. https://doi.org/10.1063/1.4982839 DOI: https://doi.org/10.1063/1.4982839
- Asian Institute of Finance (2015). Finance matters: Understanding Gen Y — Bridging the gap of Malaysian millennials.
- Asnawi, A., Awang, Z., Afthanorhan, A., Mohamad, M., & Karim, F. (2019). The influence of hospital image and service quality on patients’ satisfaction and loyalty. Management Science Letters, 9(6), 911-920. https://doi.org/10.5267/j.msl.2019.2.011 DOI: https://doi.org/10.5267/j.msl.2019.2.011
- Awang, Z., Afthanorhan, A., Mohamad, M., &Asri, M. A. M. (2015). An evaluation of measurement model for medical tourism research: the confirmatory factor analysis approach. International Journal of Tourism Policy, 6(1), 29-45. https://doi.org/10.1504/IJTP.2015.075141 DOI: https://doi.org/10.1504/IJTP.2015.075141
- Awang, Z. (2015). SEM Made Simple: A Gentle Approach to Learning Structural Equation Modelling. Bandar Baru Bangi, MPWS Rich Resources.
- Awang, Z, Lim, SH. and Zainudin, NFS. (2018). Pendekatan Mudah SEM- Structural Equation Modelling. Bandar BaruBangi, MPWS Rich Resources.
- Awang, Z. (2012). Structural equation modeling using AMOS graphic. Penerbit Universiti Teknologi MARA
- Bahkia, A.S., Awang, Z., Afthanorhan, A., Ghazali, P.L., Foziah, H. (2019). Exploratory Factor Analysis on occupational stress in context of Malaysian sewerage operations. AIP Conference Proceedings. https://doi.org/10.1063/1.5121111 DOI: https://doi.org/10.1063/1.5121111
- Bentler, P.M. and Kano, Y. (1990) ‘On the equivalence of factors and components’, MultivariateBehavioral Research, 25(1), pp.67–74. https://doi.org/10.1207/s15327906mbr2501_8 DOI: https://doi.org/10.1207/s15327906mbr2501_8
- Dalila, Latif, H., Jaafar, N., Aziz, I., & Afthanorhan, A. (2020). The mediating effect of personal values on the relationships between attitudes, subjective norms, perceived behavioral control and intention to use. Management Science Letters, 10(1), 153-162. https://doi.org/10.5267/j.msl.2019.8.007 DOI: https://doi.org/10.5267/j.msl.2019.8.007
- Hair, J.F., Ringle, C.M. and Sarstedt, M. (2011) ‘PLS-SEM: indeed a silver bullet’, Journal of Marketing Theory and Practice, 19(2), pp.139–152. https://doi.org/10.2753/MTP1069-6679190202 DOI: https://doi.org/10.2753/MTP1069-6679190202
- Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and Tatham, R.L. (2006), Multivariate Data Analysis, 6th ed., Pearson Prentice Hall, NJ
- Hogarth, J.M. (2002). Financial Literacy and Family and Consumer Sciencesâ€, Journal of Family and Consumer Sciences, 94(1), pp.15-28.
- Huston, S.J. (2010). Measuring financial literacy. The Journal of Consumer Affairs, 44(2), 296-316. https://doi.org/10.1111/j.1745-6606.2010.01170.x DOI: https://doi.org/10.1111/j.1745-6606.2010.01170.x
- Hoque, A. S. M. M.; Awang, Z.; Baharu, S. M. A. T.; & Siddiqui, B. A.; (2018a). Upshot of Generation ‘Z’ Entrepreneurs’ E-lifestyle on Bangladeshi SME Performance in the Digital Era. International Journal of Entrepreneurship and Small& Medium Enterprise (IJESME),5(7).
- Lusardi, A., Mitchell, O. S., & Curto, V. (2014). Financial literacy and financial sophistication in the older population. Journal of pension economics & finance, 13(4), https://doi.org/10.1017/S1474747214000031 DOI: https://doi.org/10.1017/S1474747214000031
- MacCallum, R.C., Widaman, K.F., Zhang, S. and Hong, S. (1999) ‘Sample size in factor analysis’, Psychological Methods, 4(1), p.84. https://doi.org/10.1037/1082-989X.4.1.84 DOI: https://doi.org/10.1037/1082-989X.4.1.84
- Mahdzan, N.S., Tabiani, S. (2013). The Impact of Financial Literacy on Individual Saving: an Exploratory Study in the Malaysian Context. Transformations in Business & Economics, 12(1), pp.4155.
- Murugiah,L. (2016). The level of understanding and strategies to enhance financial literacy among Malaysians. International Journal of Economics and Financial Issues,6(3),130-139.
- Mahfouz., S., A., Awang., Z., & Muda., H. (2019). The Impact of Transformational Leadership on Employee Commitment in the Construction Industry. International Journal of Innovation, Creativity and Change, 7(10).
- Mohamad, M., Mohammad, M., Ali, N. A. M., & Awang, Z. (2016). Measuring Positive Youth Development: The Confirmatory Factor Analysis (CFA). IJABER, 14(13), 9441-9451.
- Mohamad, M., Awang, Z., Ali, N.A.M. (2017). Validating the Maqasid Shariah Prison Quality of Life (MSPQoL) among drug-abuse inmates using confirmatory factor analysis. International Journal of Applied Business and Economic Research.15(24), Pages 91-103.
- Mohamad, M., Afthanorhan, A., Awang, Z., & Mohammad, M. (2019). Comparison Between CB-SEM and PLS-SEM: Testing and Confirming the Maqasid Syariah Quality of Life Measurement Model. The Journal of Social Sciences Research, 5(3), 608-614. https://doi.org/10.32861/jssr.53.608.614 DOI: https://doi.org/10.32861/jssr.53.608.614
- Morgan, P. J., & Trinh, L. Q. (2017). Determinants and impacts of financial literacy in Cambodia and Viet Nam (No. 754). ADBI Working Paper Series.
- Moorthy, M. K., Durai, T., Chelliah, L., Sien, C. S., Leong, L. C., Kai, N. Z., ... & Teng, W. Y. (2012). A Study on the retirement planning behaviour of working individuals in Malaysia. International Journal of Academic Research in Economics and Management Sciences, 1(2), 54.
- Nasir, M. N. M., Mohamad, M., Ghani, N. I. A., & Afthanorhan, A. (2020). Testing mediation roles of place attachment and tourist satisfaction on destination attractiveness and destination loyalty relationship using phantom approach. Management Science Letters, 10(2), 443-454. https://doi.org/10.5267/j.msl.2019.8.026 DOI: https://doi.org/10.5267/j.msl.2019.8.026
- Ngui, N. (2016, August 30). Malaysians are borrowing too much, not saving enough. The Star Online.
- Noor, N. M., Aziz, A. A., Mostapa, M. R., & Awang, Z. (2015). Validation of the Malay version of the Inventory of Functional Status after Childbirth questionnaire. BioMed research international. https://doi.org/10.1155/2015/972728 DOI: https://doi.org/10.1155/2015/972728
- Nunnally, J. C. (1978). An overview of psychological measurement. In Clinical diagnosis of mental disorders (pp. 97-146). Springer, Boston, MA.Norman, A. S. (2010). Importance of financial education in making informed decision on spending. Journal of economics and International Finance, 2(10), 199-207. https://doi.org/10.1007/978-1-4684-2490-4_4 DOI: https://doi.org/10.1007/978-1-4684-2490-4_4
- Ramakrishnan, D. (2011). Financial Literacy-The Demand Side of Financial Inclusion. Available at SSRN 1958417. https://doi.org/10.2139/ssrn.1958417 DOI: https://doi.org/10.2139/ssrn.1958417
- Remund, D. L. (2010). Financial literacy explicated: The case for a clearer definition in an increasingly complex economy. Journal of consumer affairs, 44(2), 276-295. https://doi.org/10.1111/j.1745-6606.2010.01169.x DOI: https://doi.org/10.1111/j.1745-6606.2010.01169.x
- Rahlin, N.A., Awang, Z., Afthanorhan, A., &Aimran, N. (2019). Antecedents and Consequences of Employee Safety Climate in Small Manufacturing Enterprises: Translation, Validation and Application of Generic Safety Climate Questionnaire. International Journal of Innovation, Creativity and Change, 7(10).
- Rahlin, N.A., Awang, Z., Afthanorhan, A., &Aimran, N. (2019a). The Art of Covariance Based Confirmatory Factor Analysis: Evidence from SME’S. International Journal of Innovation, Creativity and Change, 5(2).
- Sekaran, U. and Bougie, R. (2010) Research Methods for Business: A Skill Building Approach, Wiley.
- Shkeer, A.S., and Awang, Z. (2019). Exploring Items for Measuring Marketing Information System Construct: An Exploratory Factor analysis. International Review of Management and Marketing, 9(6), 87-97. https://doi.org/10.32479/irmm.8622 DOI: https://doi.org/10.32479/irmm.8622
- Shkeer, A.S., and Awang, Z. (2019a). The Impact of Marketing Information System Components on Organizational Decision Making: A case of five-star hotels in Jordan. International Review of Management and Marketing, 9(6), 1-8. https://doi.org/10.32479/irmm.8622 DOI: https://doi.org/10.32479/irmm.8622
- Velicer, W.F. and Fava, J.L. (1998) ‘Affects of variable and subject sampling on factor pattern recovery’, Psychological Methods, 3(2), p.231. https://doi.org/10.1037/1082-989X.3.2.231 DOI: https://doi.org/10.1037/1082-989X.3.2.231
- Xu, L., & Zia, B. (2012). Financial literacy around the world: an overview of the evidence with practical suggestions for the way forward. The World Bank. https://doi.org/10.1596/1813-9450-6107 DOI: https://doi.org/10.1596/1813-9450-6107
- Yahaya, T., Idris, K., Suandi, T., & Ismail, I. (2018). Adapting instruments and modifying statements: The confirmation method for the inventory and model for information sharing behavior using social media. Management Science Letters, 8(5), 271-282. https://doi.org/10.5267/j.msl.2018.4.021 DOI: https://doi.org/10.5267/j.msl.2018.4.021
- Yew, S. Y., Yong, C. C., Cheong, K. C., & Tey, N. P. (2017). Does financial education matter? education literacy among undergraduates in Malaysia. Institutions and Economies, 43-60.
- Yusof, Y., Awang, Z., Jusoff, K., & Ibrahim, Y. (2017). The influence of green practices by non-green hotels on customer satisfaction and loyalty in hotel and tourism industry. International Journal of Green Economics, 11(1), 1-14. https://doi.org/10.1504/IJGE.2017.082716 DOI: https://doi.org/10.1504/IJGE.2017.082716
References
Abreu, M., & Mendes, V. (2010). Financial literacy and portfolio diversification. Quantitative Finance, 10(5), 515-528. https://doi.org/10.1080/14697680902878105 DOI: https://doi.org/10.1080/14697680902878105
Aimran, A. N., Ahmad, S., Afthanorhan, A., & Awang, Z. (2017). The development of comparative bias index. In AIP Conference Proceedings, 1870. AIP Publishing. https://doi.org/10.1063/1.4995935 DOI: https://doi.org/10.1063/1.4995935
Aimran, A. N., Ahmad, S., Afthanorhan, A., & Awang, Z. (2017a). The assessment of the performance of covariance-based structural equation modeling and partial least square path modeling. In AIP Conference Proceedings (1842), No. 1, p. 030001). AIP Publishing. https://doi.org/10.1063/1.4982839 DOI: https://doi.org/10.1063/1.4982839
Asian Institute of Finance (2015). Finance matters: Understanding Gen Y — Bridging the gap of Malaysian millennials.
Asnawi, A., Awang, Z., Afthanorhan, A., Mohamad, M., & Karim, F. (2019). The influence of hospital image and service quality on patients’ satisfaction and loyalty. Management Science Letters, 9(6), 911-920. https://doi.org/10.5267/j.msl.2019.2.011 DOI: https://doi.org/10.5267/j.msl.2019.2.011
Awang, Z., Afthanorhan, A., Mohamad, M., &Asri, M. A. M. (2015). An evaluation of measurement model for medical tourism research: the confirmatory factor analysis approach. International Journal of Tourism Policy, 6(1), 29-45. https://doi.org/10.1504/IJTP.2015.075141 DOI: https://doi.org/10.1504/IJTP.2015.075141
Awang, Z. (2015). SEM Made Simple: A Gentle Approach to Learning Structural Equation Modelling. Bandar Baru Bangi, MPWS Rich Resources.
Awang, Z, Lim, SH. and Zainudin, NFS. (2018). Pendekatan Mudah SEM- Structural Equation Modelling. Bandar BaruBangi, MPWS Rich Resources.
Awang, Z. (2012). Structural equation modeling using AMOS graphic. Penerbit Universiti Teknologi MARA
Bahkia, A.S., Awang, Z., Afthanorhan, A., Ghazali, P.L., Foziah, H. (2019). Exploratory Factor Analysis on occupational stress in context of Malaysian sewerage operations. AIP Conference Proceedings. https://doi.org/10.1063/1.5121111 DOI: https://doi.org/10.1063/1.5121111
Bentler, P.M. and Kano, Y. (1990) ‘On the equivalence of factors and components’, MultivariateBehavioral Research, 25(1), pp.67–74. https://doi.org/10.1207/s15327906mbr2501_8 DOI: https://doi.org/10.1207/s15327906mbr2501_8
Dalila, Latif, H., Jaafar, N., Aziz, I., & Afthanorhan, A. (2020). The mediating effect of personal values on the relationships between attitudes, subjective norms, perceived behavioral control and intention to use. Management Science Letters, 10(1), 153-162. https://doi.org/10.5267/j.msl.2019.8.007 DOI: https://doi.org/10.5267/j.msl.2019.8.007
Hair, J.F., Ringle, C.M. and Sarstedt, M. (2011) ‘PLS-SEM: indeed a silver bullet’, Journal of Marketing Theory and Practice, 19(2), pp.139–152. https://doi.org/10.2753/MTP1069-6679190202 DOI: https://doi.org/10.2753/MTP1069-6679190202
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and Tatham, R.L. (2006), Multivariate Data Analysis, 6th ed., Pearson Prentice Hall, NJ
Hogarth, J.M. (2002). Financial Literacy and Family and Consumer Sciencesâ€, Journal of Family and Consumer Sciences, 94(1), pp.15-28.
Huston, S.J. (2010). Measuring financial literacy. The Journal of Consumer Affairs, 44(2), 296-316. https://doi.org/10.1111/j.1745-6606.2010.01170.x DOI: https://doi.org/10.1111/j.1745-6606.2010.01170.x
Hoque, A. S. M. M.; Awang, Z.; Baharu, S. M. A. T.; & Siddiqui, B. A.; (2018a). Upshot of Generation ‘Z’ Entrepreneurs’ E-lifestyle on Bangladeshi SME Performance in the Digital Era. International Journal of Entrepreneurship and Small& Medium Enterprise (IJESME),5(7).
Lusardi, A., Mitchell, O. S., & Curto, V. (2014). Financial literacy and financial sophistication in the older population. Journal of pension economics & finance, 13(4), https://doi.org/10.1017/S1474747214000031 DOI: https://doi.org/10.1017/S1474747214000031
MacCallum, R.C., Widaman, K.F., Zhang, S. and Hong, S. (1999) ‘Sample size in factor analysis’, Psychological Methods, 4(1), p.84. https://doi.org/10.1037/1082-989X.4.1.84 DOI: https://doi.org/10.1037/1082-989X.4.1.84
Mahdzan, N.S., Tabiani, S. (2013). The Impact of Financial Literacy on Individual Saving: an Exploratory Study in the Malaysian Context. Transformations in Business & Economics, 12(1), pp.4155.
Murugiah,L. (2016). The level of understanding and strategies to enhance financial literacy among Malaysians. International Journal of Economics and Financial Issues,6(3),130-139.
Mahfouz., S., A., Awang., Z., & Muda., H. (2019). The Impact of Transformational Leadership on Employee Commitment in the Construction Industry. International Journal of Innovation, Creativity and Change, 7(10).
Mohamad, M., Mohammad, M., Ali, N. A. M., & Awang, Z. (2016). Measuring Positive Youth Development: The Confirmatory Factor Analysis (CFA). IJABER, 14(13), 9441-9451.
Mohamad, M., Awang, Z., Ali, N.A.M. (2017). Validating the Maqasid Shariah Prison Quality of Life (MSPQoL) among drug-abuse inmates using confirmatory factor analysis. International Journal of Applied Business and Economic Research.15(24), Pages 91-103.
Mohamad, M., Afthanorhan, A., Awang, Z., & Mohammad, M. (2019). Comparison Between CB-SEM and PLS-SEM: Testing and Confirming the Maqasid Syariah Quality of Life Measurement Model. The Journal of Social Sciences Research, 5(3), 608-614. https://doi.org/10.32861/jssr.53.608.614 DOI: https://doi.org/10.32861/jssr.53.608.614
Morgan, P. J., & Trinh, L. Q. (2017). Determinants and impacts of financial literacy in Cambodia and Viet Nam (No. 754). ADBI Working Paper Series.
Moorthy, M. K., Durai, T., Chelliah, L., Sien, C. S., Leong, L. C., Kai, N. Z., ... & Teng, W. Y. (2012). A Study on the retirement planning behaviour of working individuals in Malaysia. International Journal of Academic Research in Economics and Management Sciences, 1(2), 54.
Nasir, M. N. M., Mohamad, M., Ghani, N. I. A., & Afthanorhan, A. (2020). Testing mediation roles of place attachment and tourist satisfaction on destination attractiveness and destination loyalty relationship using phantom approach. Management Science Letters, 10(2), 443-454. https://doi.org/10.5267/j.msl.2019.8.026 DOI: https://doi.org/10.5267/j.msl.2019.8.026
Ngui, N. (2016, August 30). Malaysians are borrowing too much, not saving enough. The Star Online.
Noor, N. M., Aziz, A. A., Mostapa, M. R., & Awang, Z. (2015). Validation of the Malay version of the Inventory of Functional Status after Childbirth questionnaire. BioMed research international. https://doi.org/10.1155/2015/972728 DOI: https://doi.org/10.1155/2015/972728
Nunnally, J. C. (1978). An overview of psychological measurement. In Clinical diagnosis of mental disorders (pp. 97-146). Springer, Boston, MA.Norman, A. S. (2010). Importance of financial education in making informed decision on spending. Journal of economics and International Finance, 2(10), 199-207. https://doi.org/10.1007/978-1-4684-2490-4_4 DOI: https://doi.org/10.1007/978-1-4684-2490-4_4
Ramakrishnan, D. (2011). Financial Literacy-The Demand Side of Financial Inclusion. Available at SSRN 1958417. https://doi.org/10.2139/ssrn.1958417 DOI: https://doi.org/10.2139/ssrn.1958417
Remund, D. L. (2010). Financial literacy explicated: The case for a clearer definition in an increasingly complex economy. Journal of consumer affairs, 44(2), 276-295. https://doi.org/10.1111/j.1745-6606.2010.01169.x DOI: https://doi.org/10.1111/j.1745-6606.2010.01169.x
Rahlin, N.A., Awang, Z., Afthanorhan, A., &Aimran, N. (2019). Antecedents and Consequences of Employee Safety Climate in Small Manufacturing Enterprises: Translation, Validation and Application of Generic Safety Climate Questionnaire. International Journal of Innovation, Creativity and Change, 7(10).
Rahlin, N.A., Awang, Z., Afthanorhan, A., &Aimran, N. (2019a). The Art of Covariance Based Confirmatory Factor Analysis: Evidence from SME’S. International Journal of Innovation, Creativity and Change, 5(2).
Sekaran, U. and Bougie, R. (2010) Research Methods for Business: A Skill Building Approach, Wiley.
Shkeer, A.S., and Awang, Z. (2019). Exploring Items for Measuring Marketing Information System Construct: An Exploratory Factor analysis. International Review of Management and Marketing, 9(6), 87-97. https://doi.org/10.32479/irmm.8622 DOI: https://doi.org/10.32479/irmm.8622
Shkeer, A.S., and Awang, Z. (2019a). The Impact of Marketing Information System Components on Organizational Decision Making: A case of five-star hotels in Jordan. International Review of Management and Marketing, 9(6), 1-8. https://doi.org/10.32479/irmm.8622 DOI: https://doi.org/10.32479/irmm.8622
Velicer, W.F. and Fava, J.L. (1998) ‘Affects of variable and subject sampling on factor pattern recovery’, Psychological Methods, 3(2), p.231. https://doi.org/10.1037/1082-989X.3.2.231 DOI: https://doi.org/10.1037/1082-989X.3.2.231
Xu, L., & Zia, B. (2012). Financial literacy around the world: an overview of the evidence with practical suggestions for the way forward. The World Bank. https://doi.org/10.1596/1813-9450-6107 DOI: https://doi.org/10.1596/1813-9450-6107
Yahaya, T., Idris, K., Suandi, T., & Ismail, I. (2018). Adapting instruments and modifying statements: The confirmation method for the inventory and model for information sharing behavior using social media. Management Science Letters, 8(5), 271-282. https://doi.org/10.5267/j.msl.2018.4.021 DOI: https://doi.org/10.5267/j.msl.2018.4.021
Yew, S. Y., Yong, C. C., Cheong, K. C., & Tey, N. P. (2017). Does financial education matter? education literacy among undergraduates in Malaysia. Institutions and Economies, 43-60.
Yusof, Y., Awang, Z., Jusoff, K., & Ibrahim, Y. (2017). The influence of green practices by non-green hotels on customer satisfaction and loyalty in hotel and tourism industry. International Journal of Green Economics, 11(1), 1-14. https://doi.org/10.1504/IJGE.2017.082716 DOI: https://doi.org/10.1504/IJGE.2017.082716